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Value Trumps Price Every Single Time, No Exceptions

Savvy business decisions start with value, not price.

Price is what you pay. Value is what you get.

In all my years selling business solutions to businesses, it is very rare that I come across a business leader who understands the difference between value and price. Invariably, no matter what the proposal is for, everyone goes to the back page to see what the cost is. Even worse, they use this single metric to determine who the vendor of choice will be.

As predictable as it is to find decision makers who love the back page of a proposal, so too is it never a surprise to see the project ultimately not deliver on its promise.

Years ago, I sold a decent size business a complete software package to run the business. The software investment was typically followed by an even larger investment in implementation services. The CFO, contrary to my advice, chose the services vendor who gave the lowest price. I actually remember watching him flip through the entire services proposal to the last page. It was there that this genius found what he needed to make what he thought was an informed decision.

Well, fast forward a month or so and this wizard calls me up in a state of distress. We decided to take him golfing to see what was up. Wandering down the first fairway, this CFO looks at my boss and starts to lament about what a failure the project is. My boss looks at him, and as god is my witness says, “Sorry buddy, we tried to warn you.”

That was the end of that conversation, and it was also the end of that project plan. Heads rolled, jobs were lost but worse, the project was never really a success.

Why?

Because price is not the main factor that should influence your business decisions. Value is. Price is only, I repeat only, a factor as it has any relationship to value. Period.

What is Value?

I once took a car out for a test drive. The sales dude, in the back seat, as I started out of the parking lot, says something like this: “This car cruises at 160 MPH.”

OK, putting aside the fact that if I were to cruise at 160 MPH I would likely wind up in jail, the bigger mistake this idiot made was assuming the value he placed on the car was the same as the value I would place on the car.

Even if I could, legally, cruise at 160 MPH, since I do not have a death wish, I would choose not too. Therefore, I place absolutely no value on this persons revelation.

Value is the amount of worth you place on something or some outcome. The key word in what I just said is “you”. I, nor anyone else on this planet, or in this universe, can tell you what the value of something is as it relates to you. You and only you are responsible, or capable of determining what is or is not valuable to you.

So before you make any business decisions, you have to determine the value you expect to achieve if all goes according to plan. You can certainly work with someone like me to determine the value you might achieve, but ultimately, the value is yours and only yours to determine.

My job is only to be sure I can deliver the value you expect.

So, stop asking me for an ROI.

I am not going to ever give you a standard out-of-the box Return on Investment ratio you could expect if you sign up for my services. Not only that, if you get one from other vendors you are investigating, know this: both of you are making a big mistake.

I remember a while back in a sales call, that ultimately didn’t lead to an actual sale, a dentist asked me what he could expect in terms of an ROI if he paid me for my services. In fact, he even went one step further and asked me what amount he could expect to gain for ever dollar he invested in my work.

Seriously, this may strike you as a great way to make a business decision. It is absolutely the opposite of a good way to make a good business decision. In fact what it says to me is that the person, being so clueless as to not understand how to make a choice, is grasping at the one straw that everyone turns to when they are staring into the headlights.

Return on an investment is, if considered from a financial perspective, the amount of financial gain you expect to receive from an actual investment of money. When it is calculated in terms of financial gain, it is a bit easier to figure out. The math kind of takes over.

However, when it comes to something like a business service, say, marketing services, the entire calculation is based on what you, not me, not the vendor, not the blogger, not the social media guru says it should be.

You, and only you can determine what the ROI really needs to be. And that brings my right back around to value.

Value of Business Services

A while back a client of mine decided to make a change. They replaced my services with one of these service companies that promises the world but really delivers nothing. On the website of this beacon of hope was a list of all the services they provide for the remarkably low price of, about a 10th of what I charge.

So, once again, in the world of business decisions, a choice was made based on price, not value. The reasons I can say this with confidence is, these types of service providers have figured out that the vast majority of business decisions are made by price alone. They don’t care about value because they know people are not going to select them as a result of delivering any value. They know people love low cost and make it a prority over gaining any value.

In fact, they are so convinced of people’s lack of respect for value based decisions that they say whatever they want to say on their websites knowing that people are going to gloss right past the reality of any of it, and settle their eyes on price and price alone.

The result? Well, a really bad business decision for any number of reasons including:

you are now paying more than what you are receiving in return, ergo, no value

you are in no way even coming close to achieving the desired results

you never realize the true value of your investment

In summary, what I am really saying is, if you pay a low price for a service that delivers no value, you mine as well take a match to your money and enjoy the fire burning because that would deliver more value than paying anything for a service that simply cannot deliver.

Conclusion

It is tempting, I am sure, to think you are making good business decisions by shaving dollars off the bottom line. Not true. What you need to consider are the outcomes that you place a high value on and make investment decisions to support the achievement of those outcomes.

Satisfying the need to keep costs low is the fastest way to running yourself completely out of business, or at best, achieving mediocre results.

And who among us wants to be mediocre?

Don’t go cheap. Go smart. Never pay more than a fair price for tremendous value. By the same token, never mistake getting a low price for getting a great deal. Decisions that result in the growth of your business are based on value, not discounts. Value delivers results.

My work experience includes everything from advising businesses as a CPA, selling big business software for companies like Peoplesoft and Oracle and now, starting, running and growing a small professional services firm.